Accountancy Part AAccounts for Non Profit Organsiation

Identify the term that indicates an excess of expenditure over income…

Identify the term that indicates an excess of expenditure over income, in the case of the not-for-profit organization.

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → Deficit

A not-for-profit organisation does not work for profit, so the result of its Income and Expenditure Account is a surplus (income more than expenditure) or a deficit (expenditure more than income).

Why the other options are incorrect

Option (1) Payment — Incorrect. Payments are cash paid out, shown in the Receipts and Payments Account.
Option (2) Expenditure — Incorrect. Expenditure is one side of the account, not the excess of one side over the other.
Option (4) Loss — Incorrect. Loss is the term used by business firms in the profit and loss account.

Note: This question is from the pre-rationalised NCERT book. The topic is not there in the latest NCERT book (2026-27), but it is still in the CUET 2026 syllabus, so do not skip it.

NCERT (Pre-rationalised edition):
Income and Expenditure Account – “… All the revenue items relating to the current period are shown in this account, the expenses and losses on the expenditure side and incomes and gains on the income side of the account. It shows the net operating result in the form of surplus (i.e. excess of income over expenditure) or deficit (i.e. excess of expenditure over income), which is transferred to the capital fund shown in the balance sheet.”